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UPDATE 1-Consortium led by Industry Funds Management buys Australian port leases for A$5.07 bln
April 12, 2013 / 5:31 AM / 5 years ago

UPDATE 1-Consortium led by Industry Funds Management buys Australian port leases for A$5.07 bln

* Infrastructure assets draw interest from domestic, foreign buyers

* States happy to sell off assets to supplement declining tax revenues

* Proceeds to be invested by state government in NSW infrastructure fund (Adds details, comments)

SYDNEY, April 12 (Reuters) - Australia’s New South Wales state government has sold the long-term leases on two major ports to a consortium led by Industry Funds Management (IFM) for A$5.07 billion ($5.35 billion).

The winning bid for the pair of 99-year leases on Port Botany and Port Kembla was significantly higher than anticipated following a hotly contested auction.

Australian infrastructure assets are in strong demand thanks to a relatively stable economy, attracting interest from both domestic and overseas pension funds and sovereign wealth funds.

State governments are obliging by selling off long-term leases on a variety of assets to supplement declining tax revenues.

The New South Wales government last May signed a A$2.3 billion deal with a consortium of Ontario Teachers’ Pension Plan and Hastings Funds Management for the long-term lease of a desalination plant in Sydney.

The same consortium was a rival bidder for the two ports, along with another group comprising Alberta Investment Management, Canada Pension Plan Investment Board, QIC and Australia’s Future Fund.

The IFM-led consortium, NSW Ports, also includes local pension fund AustralianSuper and Tawreed Investments Ltd, a wholly owned subsidiary of the Abu Dhabi Investment Authority.

“With over 80 percent ownership by Australian industry superannuation funds, the investment will benefit the superannuation savings of an estimated 5 million Australians,” IFM Chief Executive Brett Himbury said in a statement.

Port Botany and Port Kembla are essential infrastructure assets that serve as the primary import and export gateways to New South Wales state, Australia’s largest economy and home to approximately one-third of the nation’s population.

Port Botany in Sydney is the only container-handling facility of scale in the state, while Port Kembla, located around 90 kilometers south of Sydney, is the country’s largest vehicle import facility and serves as a key export facility for coal and other bulk products.

The state government said the sale was the largest deal it had secured in terms of net proceeds, adding it would invest around A$4 billion of the proceeds in the state’s infrastructure fund, Restart NSW.

“We must continue to look at our balance sheet and take the responsible decisions necessary to return our state’s finances to a sustainable position,” New South Wales Treasurer Mike Baird said in a statement. “Releasing mature assets so that we can re-invest in new ones is the responsible approach.”

The NSW Ports consortium and the state government are working to ensure a smooth transition of operations when the deal closes at the end of next month, state government officials said.

The state government will retain regulatory oversight of the ports as well as responsibility for several maritime safety and security functions.

$1 = 0.9468 Australian dollars Reporting By Jane Wardell; Editing by Matt Driskill

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